PPS Lease change 2017

Pia Duxbury
Thursday, 15 June 2017 10:24

On 1 March the Government introduced the Personal Property Securities Amendment (PPS Leases) Bill 2017 in the House of Representatives. This Bill passed the Senate on 11 May 2017 and will become the Personal Property Securities Amendment (PPS Leases) Act 2017 which commenced on 20 May 2017.

What are the changes?

The minimum duration of PPS leases has been extended from more than one year, to more than two years.

Leases of an indefinite term will not be deemed to be PPS leases unless and until they 'run' for a period of more than two years.

Important Note: This change does not affect agreements entered into prior to the 20 May 2017.

There are instances where a lease might still meet the general definition of a security interest (section 12 PPSA) even if it is not a PPS Lease, so you should seek professional advice if these changes could impact your business.

What does this mean for existing PPS Lease arrangements?

The changes only apply to leases and bailments entered into after the changes commenced.

For leases and bailments entered into prior to the changes, the law remains unchanged and registrations should proceed for these leases and bailments as usual.